Meta Fined €798m Over Alleged Facebook Marketplace Violations

Meta Platforms has been stung by a huge antitrust fine from the European Commission, over its online classified ads service known as Facebook Marketplace.

The European Union’s antitrust and competition regulator announced on Thursday that it has fined Meta Platforms €797.7m (£663 million or $843 million).

The Commission alleged Meta breached EU antitrust rules by tying Facebook Marketplace to its personal social network Facebook, and by imposing unfair trading conditions on other online classified ads service providers.

Facebook Marketplace

It is the first time the European Union itself has imposed a fine on Meta for breaches of the bloc’s competition law.

Rivals such as Apple and Google have already been fined billions of euros, but Meta is also currently facing a number of other regulatory challenges on this side of the pond.

For example Meta is being investigated over Facebook and Instagram child safety, and if its election integrity measures comply with the bloc’s digital rulebook.

And in the summer the European Commission provisionally found Meta infringed the Digital Markets Act (DMA) over its “pay or consent” advertising model, introduced last year, that offers users a subscription plan to remove personalised ads.

Meanwhile in May 2023 Meta was fined by Ireland’s Data Protection Commission (DPC) a record 1.2 billion euros ($1.3bn, £1bn) and was ordered to stop transferring Facebook user data to the US.

It should be noted that Facebook Marketplace first came under scrutiny by EU antitrust regulators back in 2019, after the Commission sought details about its role in relation to online classified ads.

Facebook Marketplace had been launched back in 2016 and has a total of 1.2 billion users, with 1.1 billion people apparently visiting the Marketplace every month to buy and sell items.

But it came onto the radar of European officials when its classified ads competitors complained that Facebook had used its market power to give it an unfair competitive advantage.

In 2021 the Commission opened formal proceedings into possible anticompetitive conduct of Facebook (the previous name of Meta).

In December 2022, the Commission sent Meta a ‘Statement of Objections’, to which Meta responded in June 2023.

Meta fine

Now more than a year later, the Commission said that its investigation found that Meta is dominant in the market for personal social networks, which is at least European Economic Area (‘EEA’) wide, as well as in the national markets for online display advertising on social media.

In particular, the Commission found that Meta abused its dominant positions in breach of Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’) by:

• Tying its online classified ads service Facebook Marketplace to its personal social network Facebook. This means that all Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not. The Commission found that competitors of Facebook Marketplace may be foreclosed as the tie gives Facebook Marketplace a substantial distribution advantage which competitors cannot match.
• Unilaterally imposing unfair trading conditions on other online classified ads service providers who advertise on Meta’s platforms, in particular on its very popular social networks Facebook and Instagram. This allows Meta to use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace

The Commission has therefore ordered Meta to bring the conduct effectively to an end, and to refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.

It said “the fine of €797.72 million was set on the basis of the Commission’s 2006 guidelines on fines.”

“Today we fine Meta €797.72 million for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms,” said Margrethe Vestager, the EC’s outgoing executive VP in charge of competition policy.

“Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers,” Vestager alleged. “It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU antitrust rules. Meta must now stop this behaviour.”

Meta’s response

Meta told the Associated Press in a statement that the decision fails to prove any “competitive harm” to rivals or consumers and “ignores the realities of the thriving European market for online classified listing services.”

The company said the Commission’s case ignores the fact that Facebook users can choose to ”engage with Marketplace, and many don’t.”

It reportedly said online marketplaces, including global sites like eBay, Europe-wide platforms like Vinted, and national services are continuing to grow.

Meta said it would comply with the Commission’s order to end the offending conduct and not repeat it, but also vowed to appeal the fine.